Oil & Gas

Listing Aramco in Tokyo has logic on its side

29 Aug 2019

In its lengthy quest to decide where and when it will list its shares, the Saudi oil giant may be leaning towards Japan. Tokyo’s reliance on Riyadh for oil supplies has always made it a valid choice. With other international bourses out of the picture, that may be reason enough.

TechnipFMC may work better with split personality

27 Aug 2019

The $11 bln French American oil and gas servicer is breaking in two not long after merging. Investors in the Paris-listed engineering unit will need a higher risk tolerance, though orders are booming. The remaining pipes and wells business should benefit from a higher multiple.

Viewsroom: WeWork unfurls the red flags

15 Aug 2019

The shared-office provider’s long-awaited IPO filing is packed with pointless life-affirming tropes. But it also details a host of conflicts of interest and other risks that should send investors running. Plus: India’s powerhouse Reliance is building a war chest for dominance.

Aramco’s valuation dreams become quasi-reality

12 Aug 2019

Put the Saudi oil giant’s latest dividend on Exxon’s forecast yield, and its equity nears Crown Prince Mohammed bin Salman’s desired $2 trillion valuation. Yet Aramco’s first-half payout was unusually fat. A more realistic approach would put a lower price tag on the delayed IPO.

Chevron’s M&A discipline looks smarter than ever

2 Aug 2019

The $225 bln oil major’s margins eroded in the latest quarter even as it ramped up Permian output. The effect was greater at rival Exxon. At least CEO Michael Wirth put Chevron investors first by refusing to outbid Occidental for Anadarko. But he still has a growth quandary.

Glencore coal split could scratch multiple itches

2 Aug 2019

The $42 bln giant is the largest thermal coal exporter, at a time when miners are under growing pressure to clean up. Splitting out that business would help, and can also lift a depressed valuation. It might even make sense for boss Ivan Glasenberg to lead the carve-out himself.

European oil majors’ gas lifeline could be a noose

1 Aug 2019

Royal Dutch Shell and Total rely on gas for future growth. That’s greener than oil, but weak second-quarter results show the drawback of their exposure. More importantly, longer pay back times than shale projects may help explain why the pair trade at a discount to U.S. peers.

Rio’s shiny profit masks a less lustrous reality

1 Aug 2019

The miner reported solid earnings, seasoned with a $1 bln special dividend. The detail is a bit more tarnished: iron ore operations are feeling the strain from years of cuts, and a Mongolian mine has underwhelmed. Investors love cash, but Rio also needs to invest in what it has.

ConocoPhillips exemplifies oil’s cloudy future

30 Jul 2019

The $66 bln U.S. driller posted decent returns last quarter despite lower crude prices. It upped its buyback target and talks a better game than some on climate risk. But the poor showing of shares across the sector suggests investors don’t love either short- or long-term plans.

Aramco gives bankers new scope for Saudo-masochism

19 Jul 2019

A second crack at the Saudi oil giant’s stalled $100 bln IPO could mean different bankers. Spurned advisers can comfort themselves that the listing won’t be lucrative and may never happen. The reputational and other issues that plagued the first attempt have only intensified.

EQT victors have two sets of activists to please

10 Jul 2019

The Rice brothers have won control of the underperforming $4 bln U.S. natural-gas producer which bought their company in 2017. They aim to turn around EQT within a year. Skeptics of the original tie-up, like Jana, will be watching – and climate-aware investors could show up, too.

OPEC extends its awkward holding pattern

1 Jul 2019

The oil-producing group and allies like Russia can probably gee up prices a little by prolonging output cuts brought in last year. Gulf tensions should offset a demand-led hit to prices. But they will also make big contracts like Exxon’s $53 bln one in Iraq harder to close.

DP World nets decent deal due to tricky IPO waters

1 Jul 2019

The $13 bln Dubai-listed port operator bought energy shipping company Topaz for $1 bln including debt. The buyer has avoided overpaying by sticking to its guns on the price. And Renaissance Services, the majority owner of the target, avoids a risky shot at a public listing.

American M&A makes excess great again

28 Jun 2019

U.S. deals jumped 19% in the first half even as activity ebbed in Europe and Asia. Topping the list are pricey purchases by AbbVie, Bristol-Myers and Occidental, plus Raytheon’s questionable merger with United Technologies. Most buyers’ owners will regret their CEOs’ ambitions.

Carl Icahn lands blow on weakened Occidental

27 Jun 2019

The activist’s bid to oust four directors at the oil driller over its $38 bln purchase of rival Anadarko is overkill. The board will face a grilling next year anyway. But the rash deal has tested investors’ patience. Oxy might be wise to compromise and give Icahn a partial win.

Pushy dealmakers ignore their best M&A advisers

26 Jun 2019

AbbVie and Occidental have structured huge acquisitions so shareholders don’t get a vote. Research suggests that when owners get a say, as happens more often in the UK, it can save a lot of scorched value. Bypassing them means acquisitive CEOs are losing a valuable sanity check.

The Exchange: Escaping carbon’s grip

25 Jun 2019

Saipem made its name building drills and pipelines for fossil-fuel giants like Saudi Aramco. CEO Stefano Cao visits Breakingviews to discuss how climate change is pushing the company into greener projects – and how tech challenges and a need to protect margins will drive M&A.

Gulf oil risk response looks too sanguine

13 Jun 2019

The price of Brent crude jumped 2.5% after attacks on two tankers near the critical Strait of Hormuz. The U.S. secretary of state blames Iran. With oil still barely above $60 a barrel, the market reaction to this tense situation looks mild. That puts a lot of faith in cool heads.

Shell’s giant cash gusher is climate-change hedge

4 Jun 2019

The oil major plans to hand half its $250 bln market cap to investors from 2021-2025. As a result, the share of resources poured into capital investment will fall. It may look short-termist, but it’s really a sensible admission of uncertainty about the future of fossil fuels.

Carl Icahn is a problem of Occidental’s own making

31 May 2019

The activist is upset about the U.S. shale driller’s $38 bln purchase of rival Anadarko. Oxy boss Vicki Hollub pulled some shareholder-unfriendly moves, like avoiding a vote, even if Anadarko’s disdain for its owners made her do it. Icahn will be ready to pounce on any missteps.